Spread Grows Between Packer and Feeder Margins

Cattle feeders saw average losses exceed triple digits last week.
Cattle feeders saw average losses exceed triple digits last week.
(FJ)

Beef packers continued with a stranglehold on cattle markets, buying a few cattle for their needs at an industry-average $102 per cwt. That left cattle feeders losing an average of $118 on every animal sold, and packers cashing in at a hefty $430 per head. That put the spread between feeder losses and packer profits at $548 per head.

Cattle feeding margins added $63 to the previous week’s losses of $55 for total per head losses of $118, according to the Sterling Beef Profit Tracker.

(Note: The Beef and Pork Profit Trackers are intended only as a benchmark for the average cash costs of feeding cattle and hogs.)

A year ago cattle feeders were losing an average of $1 per head on cash prices of $108. Feeder cattle represent 72% of the cost of finishing a steer compared to 71% a year ago.

The Beef and Pork Profit Trackers are calculated by Sterling Marketing Inc., Vale, Ore.

Farrow-to-finish pork producers saw their margins decline $13 per head with average losses now at $7 per head. Lean carcass prices traded at $56.71 per cwt., $5.40 per cwt. lower than the previous week. A year ago pork producer margins were negative $49 per head. Pork packers saw average profits of $25 per head, $10 more than the previous week.

Sterling Marketing president John Nalivka projects cash profit margins for cow-calf producers in 2019 will average $124 per cow. That would be 24% lower compared to the $161 estimated average profit for 2018. Estimated average cow-calf margins were $164 in 2017, $176 in 2016, and $438 per cow in 2015.

For feedyards, Nalivka projects an average profit of $46 per head in 2019, which would be $22 better than the average of $24 per head in 2018. Nalivka expects packer margins to average about $192 per head in 2019, about $22 higher than in 2018.

For farrow-to-finish pork producers, Nalivka projects an average profit of $6 per head in 2019, as compared with an average profit of $1.35 per head in 2018. Pork packers are projected to earn $16 per head in 2019, about $4 less than the $20 per head profits of 2018.

Related stories:

After The fire: Cattle Slaughter And Beef Prices

 

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